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AOL Investors: Does Arianna Have Commitment Issues?

CEO Tim Armstrong, AOL execs push comeback message

Tim Armstrong and Arianna Huffington Jin Lee/Bloomberg via Getty Images

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Huffington Post may be the engine driving AOL’s new content-first comeback strategy, but some investors are wondering how long the news site’s eponymous founder is going to stick around.

At AOL’s Investors Day Thursday, CEO Tim Armstrong and his executive team took the stage to pitch the company’s revival message and show off its suite of new products. But, when given the opportunity to ask questions, one investor asked AOL’s editorial chief Arianna Huffington, “How do we know that your interests are aligned with ours?”

The question referenced Huffington’s decision to take 25 percent of her proceeds from the Huffington Post’s $315 million February sale as AOL stock—an amount interpreted by some as too little skin to have in the game.

“I’m deeply committed,” Huffington said in reply to the investor’s question. “As I’ve said again and again, this is my last act. I don’t want to be doing anything different, because anything different, I can do here.”

Robert Peck, a managing partner at Darien, Conn.-based Quasar Capital who attended Thursday’s event, said that Huffington’s oft-repeated admission that she wants her role at AOL to be her swan song is a comfort to hear. But he said it still prompts questions.

“I think investors would like her to take on more stock,” he said. “If she put $10 million of her own money into the company [as Armstrong did in February], that would go a long way.”

The major question of when AOL’s new ventures (especially The Huffington Post Media Group and its hyper-local news network Patch) will replace its declining dial-up business as the company’s key revenue source largely went unanswered. But, Peck said, AOL’s presentations sufficiently addressed many investors’ concerns.

“They laid out much more detail about strategy and plans than they did before. Investors will like that,” he said.

Throughout the nearly daylong event with investors and press, Armstrong drove home the message that AOL was a different company, with a different mission.  He touted the company’s new “disruptive” culture of innovation and played up its renewed bonds to Silicon Valley smarts.

“This is a new AOL,” he said. “The Time-Warner AOL is dead.”

In a data-heavy presentation meant to reflect transparency and a metrics-driven approach, AOL's top brass emphasized a strategy of using content to fuel brand ads, video ads and local monetization.

As the Web becomes urbanized and people cluster around just a few big brands online, Armstrong said AOL’s plan is to the be the platform for premium content online.

“We’re making a big bet on brands and content,” he said.

With its eye on $50 billion in brand dollars that AOL says have yet to move online, the company is turning banners and buttons into content and giving rich-media ads a clutter-free, premium environment. 

But Gartner analyst Andrew Frank said that tech companies have yet to show whether Internet advertising can support the creation of high quality content on the Web.

“It’s getting the brand advertising decision-makers to believe in the medium the way they believe in television,” he said. “And it’s a hard prediction to make that that’s going to happen anytime soon.”